Episodic long-term memory (LTM) is among the most severely impaired cognitive domains in schizophrenia, and is also one of the strongest predictors of long-term functional outcome in the illness. Patients with better episodic memory also tend to have better rehabilitative treatment outcome, better work and social role functioning, and higher quality of life. Unfortunately, memory deficits are largely unaffected by our currently available treatments, and new treatments are not yet established. The current proposal aims to identify neurobiological mechanisms of relative strengths and weaknesses in episodic memory function in patients with schizophrenia to provide targets for new treatment development. The proposed research tests the novel theory that, in new learning situations, patients with schizophrenia are specifically impaired in their ability to engage dorsolateral prefrontal (DLPFC) and hippocampal mechanisms necessary for processing items of information in relation to each other while forming and retrieving long-term memories. During memory formation, patients are predicted to have trouble engaging strategies that emphasize relationships amongst items in working memory (i.e., a DLPFC working memory (WM) control deficit), and also to fail at establishing long-term memories of the relationship between items and the context in which they are encountered (i.e., a hippocampal relational binding deficit). In contrast, patients' ability to engage the ventrolateral prefrontal cortex (VLPFC) to maintain individual items in WM and their ability to engage the perirhinal cortex (PRc) to form individual item representations in LTM is predicted to be intact. During memory retrieval, patients are hypothesized to show a similar relational deficit, with retrieval based more upon the memory strength of individual items (i.e., familiarity- based recognition) and less on retrieval of the relational context in which items were encountered (i.e., recollection). Novel behavioral and eye movement memory paradigms along with functional magnetic resonance imaging (fMRI) will address three specific aims:1) To use behavioral and eye movement measures to test the hypothesis that patients have a specific deficit in relational memory, whereas their item memory is intact. 2) To use functional magnetic resonance imaging (fMRI) to test the hypothesis that relational memory deficits in schizophrenia are associated with reduced activity and connectivity of the DLPFC and hippocampus, whereas activity in the VLPFC and PRc is intact. 3) To investigate the relationship between memory performance, DLPFC and hippocampal dysfunction and measures of clinical symptoms and functional disability in patients with schizophrenia. Successful completion of this research will provide new insights into the cognitive and neural mechanisms underlying LTM deficits in schizophrenia; will generate evidence that these mechanisms represent a specific deficit in relational memory and not solely a generalized deficit arising from general inattention, poor motivation or task engagement, etc.; will identify conditions in which there are areas of preserved cognitive function that can be harnessed for remediation efforts; and will identify clinical, cognitive, neural, and functional outcome correlates of memory impairment that can become targets for new drug development and outcome measures to facilitate existing cognitive enhancement clinical trials.